Key Points:
- Industry analysts foresee that the copper bull run will continue for three years, driven by supply constraints and rising demand for energy and AI technologies.
- Chile’s challenges in maintaining copper production and global supply issues are expected to dominate discussions at the CRU World Copper Conference.
- Price forecasts indicate the potential for copper prices to reach $12,000 per metric ton by December 2026, with significant implications for manufacturers.
- Efforts to improve the investment climate in Chile signal positive developments amid the evolving landscape of the copper market.
Industry analysts predict that the copper bull run will continue for the next three years, propelled by global supply constraints and surging demand driven by the energy transition and artificial intelligence technologies. This positive forecast bodes well for major producers like Freeport-McMoRan (FCX.N) and BHP (BHP.AX), as the metal experiences a renewed demand surge akin to the one fueled by China’s rise two decades ago.
However, concerns linger over the ability of key projects to meet this rising demand, with production potentially struggling to keep pace. These issues will take center stage at the CRU World Copper Conference in Santiago, Chile, from April 15 to 17, where industry executives, investors, and analysts will convene. Chile, the world’s largest copper producer, has recently faced challenges maintaining its output.
Copper, renowned for its excellent electrical-conducting properties, is vital in various industries, including motors, batteries, and wiring. As the demand for energy-intensive technologies such as data centers for AI servers and electric vehicles grows, the need for copper is expected to surge significantly.
Maximilian Layton, an analyst at Citi, predicts that copper’s second secular bull market of the century is underway, with demand outpacing supply by 1 million metric tons over the next three years. Citi forecasts copper prices to reach $12,000 per metric ton by December 2026, a sentiment echoed by Bank of America. Current prices near $9,378 per metric ton suggest the potential for further gains.
Citi warns that unhedged manufacturers could face significant financial implications from the price surge, estimating potential losses of $320 billion, equivalent to 0.4% of global GDP. Recent production challenges faced by companies like First Quantum, Ivanhoe Mines, and Anglo American, coupled with electricity supply issues in Zambia, contribute to a tightening supply outlook.
The closure of First Quantum’s Cobre Panama mine, which supplied approximately 1% of the world’s copper, marked a significant setback for the market. Similarly, Rio Tinto’s plans for one of North America’s largest copper mines in Arizona face legal hurdles, impacting supply expectations.
Chile’s copper production challenges, notably affecting state-controlled Codelco, are expected to be a focal point of discussion. Regulatory uncertainties under President Gabriel Boric initially dampened investment sentiment, but recent efforts to improve the investment climate have been noted positively. The bullish outlook for copper underscores its pivotal role in global economic activities and the importance of addressing supply challenges to meet growing demand.
